A number of banks that already offer insurance are adding to or reinforcing their employee benefits operations in a trend that experts say demonstrates the way these banks are focusing on their middle-market commercial customers.

"This is a trend that is going to be a continuing pattern. There is more and more focus on the benefits side within the bank-insurance business, and it is a natural evolution," said James Campbell, a senior vice president at Reagan Consulting in Atlanta.

"Employee benefits is an extremely expensive line item, and every CFO struggles with this year after year. We've seen increasing health-care costs with no end in sight," said Steve Fallon, senior vice president for the employee benefits practice group of Wachovia Insurance Services. Employee benefits accounts for nearly 50% of the unit’s revenues, he said.

John Wepler, an executive vice president at Marsh, Berry & Co. in Concord, Ohio, a firm that puts together bank-agency deals, said, "We have a large number of benefits agencies that are in discussions with banks presently." Most of the interest from banks has really come only in the past eight months, he said.

"Most of the banks that we talked to want to eventually get to a threefold insurance strategy where they have 33.33% in commercial, 33.33% in personal lines, and 33.3% in group health" and other benefits, Wepler said. "These are three viable lines of business that can withstand fluctuations in the market."

Campbell predicted more banks will buy employee benefits agencies. "It’s a natural tie-in to the commercial property/casualty business," he said.

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